Bigger doesn’t always mean better, as investors in the FTSE 250 can testify.

The midcap index has romped ahead of its bigger peers in the FTSE 100, climbing 23 per cent in the 12 months to April 3 compared with a 12.6 per cent gain among blue chips.

Over the longer term the difference is even more striking. Mid caps have gained 236.1 per cent in 10 years compared to a 68.6 per cent climb on the FTSE 100.

That is despite the fact that blue chips have historically been seen as providing a safer haven than smaller companies in difficult markets because they tend to be less volatile.

So why are the smaller fry beating the big fish and how do the markets compare? We take a look.

Big fish: Getting beaten by the smaller fry

The FTSE 100 vs the FTSE 250

The sector make-up of the two indices is quite different and this has driven the mid caps’ outperformance, according to investment experts.

The FTSE 100 has been held back in the last year by its hefty mining sector where investors have been locking in profits.

Oil giants BP and Royal Dutch Shell have also failed to sparkle and have hampered the benchmark’s gains.

Banks have fared relatively well lately but were a major contributor to the FTSE 100’s fall amid the credit crunch as investors fled and share prices collapsed.

These three sectors make up 43 per cent of the FTSE 100 and the index’s 10 biggest stocks represent 45 per cent of its whole value.

In contrast, the FTSE 250 has hardly any banks and a relatively small weighting in the oil, gas and mining sectors.

Gavin Haynes, of investment manager Whitechurch Securities, said: 'It is really very much down to sector make up … the 250 provides a broader spread and it has done very well from having a wider exposure to different industries.'

The FTSE 250 does have an abundance of house builders among its constituents but this sector has been a star performer in the last year helped by growing sales and profits. Barratt Developments has soared 111.4 per cent over 12 months, Bovis Homes has jumped 56 per cent and investors in Persimmon are sitting on 72.7 per cent growth.

Long-term view: Yellow: FTSE 250 vs Blue: FTSE 100

An index of nimble survivors profiting from overseas

The mid cap index has a more domestic bias than the FTSE 100 where over 80 per cent of earnings are generated overseas.

But medium-sized companies have increasingly been casting their net further afield and now more than half of mid caps’ earnings are international.

The advantage FTSE 250 companies have over their bigger peers is they can be more nimble when they spot a growth opportunity overseas. Their smaller size allows them to move faster and the impact on their bottom line is more pronounced.

Many of the FTSE 250 companies are also seen as the best in their class, having survived the economic storm of recent years.

Adrian Lowcock, of IFA Hargreaves Lansdown, pointed out: 'Those that have survived have gained market share from those that have fallen by the way side.'

Electrical goods retailer Dixons, for example, has benefited from rival Comet’s demise. Its shares are up 75.6 per cent during the past year.

But can the FTSE 250 continue its run? Expert’s fund tips

Investors should perhaps exercise caution before diving head first into the FTSE 250.

After such a strong run among mid caps it could be the mega caps’ turn to shine. They are certainly looking cheaper than their smaller peers.

Whitechurch’s Haynes said: 'After a strong period of performance the valuations on the mid 250 are much higher. The FTSE 100 is at a significant discount.'

In light of this, investors may want to hedge their bets and opt for a fund that invests across different size companies rather than solely in mid caps.

Arguably active fund managers find it easier to find undiscovered opportunities among mid and small cap companies since they are less heavily researched than blue chips. Among the actively managed funds in this area is the Franklin UK Mid Cap, run by Paul Spencer, which has returned 23.4 per cent over 12 months.

FUND JARGON BUSTER

The investment industry's world of abbreviations...Acc: Accumulation - any income generated by the fund like dividends or interest is automatically reinvested.Inc: Income - any income generated is distributed by the fund instead of being reinvested. Dis: Distribution - any income generated is distributed by the fund instead of being reinvested. R: Retail - the fund is aimed at ordinary investors. I/Inst: Institutional - the fund is aimed at corporate investors like pension funds. A, B, M, X etc: Different fund houses use letters for different things. Check with them what they stand for. NT/No trail: Some fund houses use this name on clean funds which carry no commissions for financial advisers, supermarkets or brokers, just the fee levied by the fund manager. But other fund houses use different letters - I, D or Y, for example - so you need to find out for yourself which are clean funds. Gr: Stands for gross. GBP/£: Fund denominated in pounds. EUR: Fund denominated in euros. USD/$: Fund denominated in US dollars. Compiled with online stockbroker The Share Centre